Is Thermo Fisher Scientific Inc. Destined for Greatness?

Diagnostics leader Thermo-Fisher (TMO) could soon make a huge splash in genomics, but it's got plenty of other irons in the fire as well.

Investors love stocks that consistently beat the Street without getting ahead of their fundamentals and risking a meltdown. The best stocks offer sustainable market-beating gains, with robust and improving financial metrics that support strong price growth. Does Thermo Fisher Scientific (NYSE:TMO) fit the bill? Let's take a look at what its recent results tell us about its potential for future gains.

What we're looking for The graphs you're about to see tell Thermo Fisher Scientific's story, and we'll be grading the quality of that story in several ways:

Growth: Are profits, margins, and free cash flow all increasing?

Valuation: Is share price growing in line with earnings per share?

Opportunities: Is return on equity increasing while debt to equity declines?

Dividends: Are dividends consistently growing in a sustainable way?

What the numbers tell you Now, let's take a look at Thermo Fisher Scientific's key statistics:

How we got here and where we're going Thermo Fisher Scientific earns a rather mediocre four out of nine passing grades on our test today, but there are certainly opportunities for the company to grab some low-hanging fruit next year. One of its failing grades was only awarded because net income narrowly surpassed free cash flow during our three-year-tracking period -- however, Thermo-Fisher's nominal free cash flow has been consistently higher than its net income throughout the past three years. Thermo-Fisher's shareholders have enjoyed robust growth over the past three years, and shares have actually surpassed bottom-line growth as investors flock to the increasingly diverse diagnostics company. But does that mean Thermo Fisher will keep outperforming in the future? Let's dig a little deeper to find out.

Putting the pieces together Today, Thermo Fisher Scientific has some of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy -- or to stay away from a stock that's going nowhere.

Author

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.